What are the most common family business issues that can hurt your business?
- No succession plan to transfer business ownership and, even more important, leadership to the next generation.
- No way to manage the often difficult or seemingly unfair decisions that are made because of family relationships—particularly when more deserving people are overlooked.
- My Father does not hear me or respect me.
- My kids expect something for nothing and have no idea how hard I have worked to make this business prosperous.
What are the most common ailments that impact family relationships outside of the day-to-day business functions?
- Husbands and Wives business partnerships take their work home—work is all they talk about and work is what they fight about. It is very difficult to work together in the business and stay happy together outside of the business.
- Family members and family relationships become mildly or even very significantly estranged outside of the business. Siblings will not talk to each other. Even worse, siblings despise each other. Family members decline invitation to be together for family events like parties, celebrations, holidays or special events.
- Fathers and sons lose respect for each other—this is particularly troubling when fathers are typically heroes and lose that well-deserved status because the son cannot see a way forward under his father’s wings.
What are the most common business issues that malign family run small businesses?
- Job performance is significantly lacking—accountability is particularly hard to maintain in a family business so family members can often perform their job functions at very average or even poor standards.
- Process control and standard operating procedures are very often lacking—we treat family members worse than we treat typical workers. We have high expectations but are not super clear about what those expectation are and what being successful at their job means.
- It is often very difficult for family members to be professional in front of non-family employees. Personal issues spill into work issues and cause all parties involved to perform poorly.
Does Family Business Pointe do one-on-one consulting?
Yes, but only by special circumstances based on the seriousness of the family business condition. Those interested in one-on-one consulting can email in a request along with an explanation of circumstances. Each case is considered individually.
Does Family Business Pointe perform special professional services like dispute resolutions, succession planning, estate planning, or specific consulting?
Short answer, no. We work with affiliates and recommend professional that have skills and expertise in these specific areas. All of these can be critical components of successfully navigating your family business—we want you to have the best resources you can possibly find. Key point, you will likely need help with many of these things and it is worth the money to get a real professional on board.
Can an Outside Advisory Board take control of my business?
NO! End of Story…they have no voting rights, no fiduciary rights and no jurisdiction rights by law or any other means.
How many people should be on my Board?
Depends on the size of your business. If your business is very small, I would recommend no fewer than two people. Most small family businesses do well to use three outside board members. If your family business is very large, you might use four.
How much do I pay an Outside Advisory Board Member?
Depends on several factors such as:
- How often do you meet?
- How much do you assign them to do outside of the meeting?
- How long are your meetings?
- How far does he/she have to travel to get to the meeting?
- How big is your company?
- How much responsibility are you going to give to the board?
A very typical range might be something from $50.00 per meeting all the way up to $2,500 per meeting? Most small businesses might offer something like $250-500.00 per meeting? Not very much considering how much value they will give you.
Many will do it for free—just want to give back and help you out. Of course, you would be rude not to offer something.
How often does an Outside Board need to meet?
Most boards get together on a quarterly basis or three times a year. Much further apart then that and the meetings lose their influence. Much more then that and it becomes overwhelming.
How formal does an Advisory Board Meeting have to be?
Depends, some people choose to have very formal meetings and adopt parliamentary procedures, although most people opt for something less formal where ideas can flow freely between everyone and where motions and votes are unnecessary.
Dress, formality of the room, and meeting location are all items that can be worked out and can be as formal or informal as desired.
Normally, the personality of the business owner determines the level of the meeting formality.
Board meetings can happen at your business conference room, or even lunch room, or they can be rented rooms off site at a local college, conference center, hotel, etc.
Does every family business need an outside Advisory Board?
In my humble opinion, yes! It has almost no downside and enormous upside. Big public corporations use Board of Directors because, one, it is the law, but, an even more important two is because it is a tremendous help, overall, to the business.
In addition, big publicly traded business don’t become the bohemian successes that they are without an enormous amount of leadership and human capital—boards, when done right, are a huge asset to companies both small and large.
In my humble opinion, nearly all small business entities, family owned or not, would greatly benefit from an outside group of advisors—call it whatever you want.
What is the difference between an Advisory Board and a Board of Directors?
Advisory Board, as the title sounds, means a group of influencers that advise but do not, officially, rule or govern over the business.
For business owners that are worried about all the control issues, this is a very good option because this outside group is not listed as a company’s official Board of Directors.
Many small businesses opt for this type of Board.
The other benefit is for the Board members themselves. Official Board of Director members hold fiduciary and liability risk if they are directing a company. Board of Director insurance is a common thing for real Board of Director types (normally paid by the company, not the Director).
Being on an Advisory Board vs a Director’s Board takes that risk away.
Most states, if not all, require corporations to make use of a Board of Directors. Those Directorships for small businesses, as we often discuss, are normally comprised of the owners themselves. Still, to make a corporate veil viable, the Owner-Directors, no matter how small the group is, need to meet and have minutes and records of their meetings to show that the corporation is real and, effectively, acting like a corporation.
Corporate veils are often pierced by skilled attorneys if the company cannot demonstrate that besides having the corporation in place they actually acted like a corporation.
What is meant by the term “Outside” Board?
The idea here is to comprise a group of leaders or advisors that come from outside the family circle.
This, not surprisingly, works well for any small business, family owned or not. A huge majority of small business start with partners, usually good friends at first, who share financial and intellectual resources.
However, just like family members, friends can easily become estranged over money and business issues.
A group of outside influencers can do wonders for families and other partnerships because an outside group brings in fresh, unbiased, unemotional perspective.
Most people fear outsiders, as we have mentioned ten thousand times, because they do not want to lose control.
Outside Boards are not intended to take control of your business or tell you that you are a poor performer. However, if a person is terrified of using an outside group as an Advisory Board then that might be a telling sign that he/she really could use it.
Most of us cannot get out of our own way. Unfortunately, we are not self-aware enough to see that much of the pain or frustration we encounter in our business is from our own making. Sadly, we are quick to point out other family member’s weaknesses while being completely blind to our own.
An outside group, just being present and aware of our work, will force us to look more deeply into the root causes that sometimes stall our small business without us even being aware.
What makes Family Business Pointe different from typical consulting or training?
Most consulting loses its punch because it lacks executability, meaning someone can tell us how we need to improve our business but the real work is in the execution or work, not in the consulting.
Said another way, most business owners are already aware of the many things that need improving. The trick is finding the time to actually make the improvements or even more, finding the stamina to stick with the effort it takes to make the improvements.
Any small business owner reading this will be nodding their head and saying, “This is true!”
FBP is not an attempt to consult, as it were, on being smarter. It is an attempt to consult on implemented actions that will, in fact, be doable, sustainable and make your company better.
It comes that way because of my experience in the actual belly of small business and family business ownership. Experience trumps book learning any day in my opinion—good to have both actually. That is what sets FBP apart—real experience coupled with real education and training.
How much improvement will an Outside Board provide to my company?
Obviously, results are hard to quantify but I will not hesitate to say that those companies operating with an outside group of directors will usually out perform their peers significantly.
I normally see a very quick improvement to both top line and bottom line revenue.
Top line sales numbers can easily grow ten to thirty percent and bottom line numbers will typically move up three percentage points very easily. Many times we see bottom line numbers double.
That thin layer of accountability makes such an enormous difference.
In addition to improved revenue, you family issues and relationship issue can begin to make a real turn for the better as well. Listening and respecting always happen better on the stage verses behind the state, as it were.
Using an Outside group creates that performance stage.
Making more money, having more and better inter-family communication and enjoying better family relationships are all very commonly achieved. When executed right, it is nearly a foolproof method and always works.